As Brand Loyalty Declines, 2 Trends You Should Know for 2014

Ilan Mochari's debut novel, Zinsky the Obscure (Fomite Press, 2013), earned rave reviews from Publishers Weekly, Kirkus Reviews, and Booklist. Boston's NPR station named it one of 10 "Good Reads for the Summer." He is a senior writer for Inc. magazine.

If you're building a brand for consumers, your job will get harder next year.

According to a recent Deloitte survey of 4,047 respondends encompassing 28 product categories and more than 350 brands, brand loyalty is declining.

It is the third straight year in which brand loyalty has declined. Not surprisingly, private labels are thriving under these conditions: 88 percent of those surveyed report finding private labels that they believe are just as good as national brands. And only 27 percent say they will revert to national brands from private labels when the economy gets better.

That's one trend companies should be aware of heading into 2014, notes Pat Conroy, Deloitte's vice chairman and U.S. Consumer Products leader. Another trend is what Conroy calls a "recessionary mindset" from consumers: That is, a mindset wherein consumers say they will not increase their spending in 2014, even if the recession ends. The reason for the caution? Too many consumers remember being burned by the length of the previous recession.

How Brand Builders Should Respond

Practically speaking, what does this mean for brand builders?

Conroy suggests thinking more carefully about the target markets for each brand in your product portfolio. Which brands target affluent consumers? Which brands target price-conscious consumers? Which brands target all consumers? These questions matter more in a climate like this, in which affluent consumers might be the only ones able to retain their brand loyalties.

In other words, brand segmentation is the key. Consumer products companies "need to rethink their product portfolio in light of the widening gap between the affluent and lower-income households," says Conroy. "Consumer products companies may need to have distinct strategies (e.g., brands, product offering, pricing) to target affluent and lower-income consumers."